Pento:  “Don’t forget the Great Recession supposedly ended in 2009.  Here we are in 2013, almost 2014, and yet the Fed has never been more accommodative than they are today, and the economy is so reliant on this amount of artificial stimuli, that they can’t drop purchases by even $1....

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Eric King:  “I want to talk about what this means for the Fed, Michael.  Is this a disaster for the Fed because the prediction ahead of time (by Fleckenstein) was that this was going to lead the world to understand that the Fed is in fact trapped.” 

Pento:  “Exactly ... The 10-Year went from 1.4% to 3%, and that made Mr. Bernanke panic.  The average on that (10-Year) yield is 7% in the modern since 1971 when we closed the ‘gold window.’  So, if the average is 7%, and the United States of America, this once great land, can’t (even) tolerate a 3% yield on the 10-Year Note, that means the Fed can never unwind QE.

That’s enough to cuff Mr. Bernanke’s hands.  So the Fed is indeed trapped as you indicated.  They cannot significantly bring down QE.  That means a perpetual increase in the Fed’s balance sheet.  That (also) means an inexorable rise in asset bubbles like stocks, bonds, and real estate, and it’s going to end (very) badly.”

Pento went on to discuss the preposterous theory that the Fed can unwind its balance sheet:  “Who is going to buy a bond knowing that the Fed is going to be a seller of trillions of dollars worth of U.S. debt?  Either way, the low print of 1.4% on the 10-Year Note has been placed in stone.  It doesn’t go back down there, and we are in for a protracted increase in bond yields, despite what Ben Bernanke & Company are doing.”      

Eric King:  “For the gold bulls that are out there, Michael, is this the start of something huge?”

Pento:  “It’s the start of something tremendous.  The vote on the FOMC, there are 10 members that vote, was a 9 to 1, nearly a unanimous vote not to taper one lousy dollar.  Most likely you have Janet Yellen coming in in January, who is a ‘Super-Dove’ compared to Mr. Bernanke -- who has $85 billion every month and can’t even drop it $1.

So why would anybody now think this is the time to sell gold?  Gold stocks that I own in the portfolio are up nearly 20% today.  (The reality is) this is the beginning of a massive and protracted buy-in for those who are short gold and gold mining shares.”   

Pento also added this tragic reality:  “Isn’t it amazing that we gave an unelected entity this much power -- the power to destroy the currency, and the middle class of this great nation.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

UPDATE - The is an incredibly powerful audio interview with acclaimed economist Michaael Pento.  His fascinating KWN audio interview is available now and you can listen to it by CLICKING HERE.

IMPORTANT - In the aftermath of this historic Fed decision, King World News will be releasing special interviews all day today.  Yesterday, Egon von Greyerz correctly predicted that the Fed would not taper and it would shock the market and gold would soar.  That’s exactly what we have seen today.  More interviews are on the way. 

Michael Pento: President & Founder of Pento Portfolio Strategies and the author of

“The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market”

To order from Amazon CLICK HERE.

The audio interviews with Michael Pento, Eric Sprott, Andrew Maguire, Grant Williams, Stephen Leeb, Bill Fleckenstein, Pierre Lassonde, Dr. Paul Craig Roberts, Art Cashin, Egon von Greyerz and Marc Faber are available now. Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.

Eric King

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© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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